Laser micro-machining is finding many applications in materials processing and manufacturing. Various laser techniques are being used to fabricate micro-electronics, optics, and medical components. This paper will mainly deal with the fundamental issues involved in laser-matter interaction. Our studies are focused on laser induced thermal and thermomechanical phenomena and phase change mechanisms that determine the materials removal process during laser micro-machining. It is shown that during nanosecond laser machining, explosive phase change could occur, during which the liquid is superheated to close to the thermodynamic critical point, followed by an explosive, homogeneous phase transformation. On the other hand, it is observed in the experiment that the time needed for nucleation during laser induced phase explosion is on the order of one nanosecond. Thus, when a laser with a pulsewidth of the order of picosecond or less is used, it is likely that the material can be heated above the critical point, and another type of phase change, spinodal decomposition is possible. Molecular dynamics studies showed that with the use of a femtosecond laser pulse, it is possible to superheat the material to above the critical point, and spinodal decomposition is the dominant mechanism for materials removal.